BUS 315 - Final Paper - Hilton Worldwide Company Analysis PDF

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Hilton Worldwide Company Analysis...

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Hilton Worldwide Company Analysis Jacob Baysa, Blaise tolentino, Morgan Cheng, Elizabeth Sickels, Ashley Tonai, Professor Garrett Sullivan Global Management & Organizational Behavior December 5, 2017

Paper: No less than 5 pages, single spaced, 12 pt Times New Roman, with references

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Company Selection & Organization Opening their doors in 1919, the Hilton Hotels and Resorts have expanded to over 550 locations across the globe. Their vision is ton “To fill the earth with the light and warmth of hospitality by delivering exceptional experiences at every hotel, to every guest, every time.” Their mission is “To be the most hospitable company in the world by creating heartfelt experiences for Guests, meaningful opportunities for Team Members, high value for Owners and a positive impact in our Communities.” Their values also follow the acronym HILTON: Hospitality (passionate about delivering exceptional guest exps) Integrity (do the right thing, all the time) Leadership (We’re leaders in our industry & communities) Teamwork (team players in everything we do) Ownership (owners of our actions and decisions) Now (operate with a sense of urgency and discipline) Hilton’s main competitors are Marriott International Inc., Wyndham Worldwide Corp., and Hyatt Hotels. Prior to the 2016 merge of Starwood hotels and Marriott International, the Hilton hotels were ranked at the top of their peers. However after the merge, the Hilton lost that position and is now second.

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Hilton Worldwide uses a hierarchical structure due to its size, serving 140 million guests worldwide. Although it has a hierarchical structure due to its size, you can also describe this structure as divisional due to Hilton’s business divisions. Hilton operates in three divisions: ownership, management, and timeshare. With approximately 5,000 properties under 14 brands and a span of 100+ countries, a divisional structure is suitable for Hilton because Hilton places an emphasis on quick decision making at all levels of the business to better accommodate consumers and to be the most hospitable company in the world. Another reason why Hilton falls under the divisional structure is it has geographic-based

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divisions within their executive committee. Under the CEO, there are vice presidents in divisions in: U.S, Asia Pacific, Europe, Middle-east and Africa. This allows Hilton to serve its brand worldwide and cater aspects of Hilton to the region. To get a feel for Hiltons job requirements, we researched a few of their jobs and what they entail. Jobs we researched include a supervising manager, a senior revenue manager and a regional director. These jobs are job goals we have if we were in the organization. A supervisory manager oversees the front office activities that create the first impressions guests have. As a supervising manager, you’re expected to keep a consistently high standard. A few requirements this job requires is ensuring your teammates are knowledgeable with any hotel services, products, pricing, special offers and daily events. For Hilton Worldwide, providing hospitality is at the forefront. A supervising manager will need to manage guest request, inquiries, and complaints promptly and in their best manner. To be a valid candidate for this position, it is recommended you have hotel office experience, a calm and organized work ethic with the ability to meet deadlines. You will also need excellent communication skills and a passion for delivering exceptional hospitality to guests. Senior Revenue Manager would be another job goal for us if we were in the organization. A description of this role includes the responsibility of analyzing and generating financial data that will the sales executive team make informed decisions. A senior revenue manager will also need to create reports portraying the financial health and progress of the organization. A senior revenue manager will also be required to outline risks and opportunities pertaining to the organization. Some requirements to be eligible for this job consist of having the ability to work under pressure as well as working under your own initiative. You will also need to have knowledge of the local markets, a passion to achieve financial targets and experience with financial modeling. Environment & Culture The slogans that reflect the vision and mission of Hilton are their slogan ‘Take me to the Hilton,’ ‘We are Hilton, We are Hospitality,’ Recognition Matters,’ and ‘Catch me at My Best.’ Hilton’s name, Hospitality, Integrity, Leadership, Teamwork, Ownership and Now remind employees about their foundation and how they plan to achieve their mission. As a hotel service chain, Hilton strives for hospitality and in order to do so they must install high integrity, leadership, teamwork and ownership throughout their many chains. The organization’s heroes for Hilton are Conrad Hilton and Christopher Nassetta. Conrad Hilton is one of the organization’s hero because he started the business in Texas and expanded it to becoming a hotel empire. From the beginning, Conrad embodied the entrepreneurial spirit and ethics that were needed to build Hilton into the brand it is today. He was known for dreaming big and acting big, which is related to the integrity placed into the hotel’s values and name. For hospitality, Conrad also started a foundation in his name for providing funds to non profit organizations to improve the lives of the disadvantaged throughout the world. Christopher J. Nassetta is another organizational hero as he currently is the president and CEO of Hilton from 2007 till today. He’s ranked forty-nine on the list of 100 CEOs of large U.S

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companies and serves on multiple boards. From researching about him, I noticed that he does keep Conrad’s values alive by serving on boards beyond the Travel and Tourism industry. From Conrad’s foundation, Nassetta also promotes youth foundations to ensure the power of the younger generation. He also serves on boards to promote and assist performing arts programs. I feel that with serving other boards in the community and focusing on the youth, he is practicing and promoting the values that Hilton aims to offer. Hilton has many stories about their employees that follow the organization’s mission and values. From doing research, I learned that Hilton has a section called ‘We are Hilton, We are Hospitality,’ which gives spotlight to those who work under Hilton that have done remarkable things to their community. One of them that stood out to me is Emily Egan, a marketing manager at the Millenium Hilton in New York City (Hilton). Her story was very inspiring because she was able to use her passion for hospitality to create a digital job board on FaceBook to help hundreds of people find jobs in New York City. Hilton recognized her and thanked her for showing the Hilton message of hospitality to others outside the community. The second story revolves around the organization is another recognition method called ‘Catch me at my Best’ which allows employees to be recognized by customers on their outstanding service. With this system worldwide, it shares the message that Hilton aims to offer and it’s important for organizations to recognize and reward their employees, no matter what position they hold. The external environmental factors that influence Hilton’s ability to compete effectively are their customers, competitors, and technology. For customers, Hilton emphasizes the millennial mindset and applied changes to target them which translated effectively to their entire customer sector. From an interview by eMarketer, millennials have high standards for customer experience. By incorporating this strategy, Hilton was able to develop and upkeep the Hilton Honors program. This program is an award system designed to retain loyal customers of Hilton, where customers can receive a plethora of benefits. It encourages customers to choose Hilton as their primary choice for hotel accommodations through points and perks of consistent use. Furthermore, Hilton Honors expands to all brands under Hilton’s umbrella to offer guests a wide range of places to stay at. These additional aspects create a relationship by giving the customer an incentive for choosing to stay at Hilton. As for Hilton’s competitors, their strengths in being able to compete effectively are adding more brand names and hotel location. I feel that by creating new brand names to boost their competition is risky for their business because it would affect the customer segments that are already loyal to their original brands. Also, it might mislead new customers to go for their new brand names because of not enough information about the new brand and choosing familiarity over something new. For technology, Hilton has a high advantage by having global online services, and resources that are catered toward their customers. This include easy access for customers and team members to use their website, app, and other systems integrated into the company’s services. This gives them an advantage to compete because with technology it’s eases the use for customers, making the stay more enjoyable and reduces loss of business. It focuses on their

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values and vision of hospitality by putting their customer first. Hilton can interact or touch base with customers, investors and other members outside of their current corporate location via their ‘Catch me at my Best’ ranking system, which allows customers and team members to interact with one another. Goal Setting The following SWOT analysis dives into Hilton’s key internal strengths, internal weaknesses, external opportunities, and external threats. Strengths ● Tremendous Brand Recognition ● Diverse Property Portfolio ● Customer Retention Programs ● Steady Supply Chain

Weaknesses ● Overly reliant on U.S. market ● Late globalization efforts ● Low flexibility due to size ● High levels of debt

Opportunities ● Global Market Penetration ● Strategic Alliances ● Mid-level Brand Hotels ● Technological Integration

Threats ● Global Market Fluctuation ● Economic Conditions ● Data Breaches ● AirBnb

Looking at the SWOT analysis, it is clear that Hilton has positioned themselves effectively as a hospitality powerhouse. Their two biggest strengths are brand recognition and diversity within their property portfolio. Any traveler will immediately recognize the Hilton brand, which has become synonymous with customer satisfaction and quality. Hilton’s main weakness stems from its late expansion into the global market. The company chose to penetrate the United States market and establish a consistent brand image and corporate structure before extended its reach internationally. Other competitors got a leg up on Hilton and were able to define themselves in the global environment much earlier. Once Hilton did expand to other countries, they experienced and are still experiencing the need to catch up with competitors like Marriott and Hyatt. While their roots in the United States prove to be highly profitable, an over reliance on this market has limited their growth and scalability. This brings up to the key external components that is affecting Hilton and will continue to remain factors for the years to come. The main areas of opportunity is in global market penetration and strategic alliance with other corporations. To effectively improve profitability and growth, Hilton will need to capitalize on the international marketplace. As mentioned above, late global expansion has set them behind competitors yet far from being successful. One thing to note about the market expansion is the opportunity to partner with online book sites. Hilton was reserved with allowing guests to book stays via third-party sites such as Tripadvisor. They have recently shifted this mentality and now allow other booking sites to offer this feature. It will greatly help them in the international market as many travelers in foreign countries, especially China are used to booking things through a mobile device. And on the topic of China, there was found to a high affinity between China and American brands. This could

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prove advantage as Hilton expands there since their brand name could reduce the impact of competition in the foreign market. Hilton also recently opened up a new brand in 2016 called Tru by Hilton. These hotels are located in sub-urban areas and are priced significantly lower than other brands under Hilton’s umbrella. Their price tag is around to or less than $100 a night and offers an affordable way to stay at a Hilton while maintaining the overall customer satisfaction and rewards. Additionally, it was found that 30% of hotel demand in the United States is for rooms priced below $85. Major threats for Hilton include class-action lawsuits, data breaches, economic conditions, and AirBnb. As tourism and travel are affected by the economy, so to is the outlook for Hilton’s profitability. Industry fluctuation both nationally and internationally will directly impact the bottom line. One way to combat this scenario is to build relationships with guests and provide exceptional satisfaction for guests that will encourage them to continue to stay with Hilton. The new addition of Tru will allow Hilton another opportunity to meet customers at a lower price point. The diversified revenue strategy would still be affected overall by an underperforming economy, however at this point in time, the outlook is positive. Finally the rapid rise of AirBnb has proven quite troublesome for the traditional hotel industry. Many travelers have found the company to provide great value for short-term stays and made the switch. Yet, there are many reasons why Hilton will still play an important role in the hospitality industry. Hilton offers a wide range of services that many AirBnbs cannot match. This includes upscale services and features such as restaurants, pools, bars, gym, and service staff. Another factor is the loyalty program, Hilton Honors. The benefits mentioned above develop a customer relationship that the variety of AirBnbs struggle with. The consistent nature of a corporation will continue to attract business travelers and the rewards program offers more incentives to keep coming back. For last-minute travelers, there are many rooms available at a hotel which helps combat the issue of inventory of AirBnbs. While they do have many properties available, most will need to be booked in advance to secure the stay. Leadership Leadership plays a large role in the success of an organization. A leader must be aligned with the mission, values and culture of a company for the company to successfully achieve their organizational goals. With a large base like Hilton Worldwide, it is essential that everyone is striving to overly achieve the hospitality demanded by customers worldwide. Christopher J. Nassetta is Hilton Worldwide’s leader and has made monstrous accomplishments during his time spent at Hilton. Within his first 90 days, Nassetta determined that the organization would need to go through a transformation to achieve the vision originated by Conrad Hilton in the 1940’s. He determined a change needed to be made after he circumnavigated the globe talking to managers all the way down to their frontline employees. Alignment was a big issue Nassetta identified. He described the state of the organization when joining as “getting on board with the oarsmen rowing out of sequence.” Nassetta identified the lack of integration due to Hilton’s strategy of mergers and acquisitions. Companies were operating with their own priorities which weren’t always consistent with the vision, mission and values of Hilton. In order to make changes to the

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downline, he first needed to change the upline which consisted of top level managers. During the transition period, Nassetta replaced nine of ten of his top managers and replaced 50/100 of the top 100 personnel. This signaled a commitment to employees that Nassetta was committed to the organizational goals. Once new personnel were implemented, Nassetta pushed down decision making for the organization to run much more efficiently. Nassetta knew that no one could effectively manage every detail of the operation. This tactic empowered employees to keep the ball rolling and advance the priorities of the organization. Another tactic Nassetta implemented was the Immersion program. Nassetta father gave Nassetta the advice that the only way understand a business is from the bottom up. The immersion program does just that. The program is designed to involve executives in day-to-day operations. This would build engagement with team members and may even uncover findings that may better enhance the guest experience. Jerry Gibson is among the top managers at Hilton and is the VP of Hawaii and International operations. Gibson has over 40 years of experience in the hotel industry with many successes. Gibson sits on many boards with a few being the Hawaii Lodging and Tourism Industry Association, the Chamber of Commerce of Hawaii and the Waikiki Beach Special Improvement District. When making decisions, Gibson likes to hear multiple perspectives on opportunities that can be taken. One example is during Hiltons Week of Service. Gibson and the Hilton Grand Vacations decides together on which foundations they will be supporting with their service. One project executed by Gibson was adding an additional tower to Hilton Waikiki. Although this did provoke public protest, Gibson had to weigh the pros and cons of development. Cons would consist of traffic, parking and overcrowding. Pro’s for development were creating 125 more parking stalls, over 500 job opportunities and an increase in tax revenue for the state of Hawaii. Because Waikiki is competing with destinations across the globe, it is essential that Waikiki continues to improve. The area of Waikiki is less than 1% of the total square miles on Oahu but accounts for 18.5% of GDP. An importance to keep the revenues flowing into Waikiki are necessary to keep Oahu a healthy economy. With the pros outweighing the cons, Gibson went ahead to develop the Grand Islander tower and unveiled it earlier this year. Christopher Nassetta and Jerry Gibson are two examples of top executives who strive to embody the vision, mission and values of their organization. For the respective two, money is not the motivation. Being a part of a great organization is. This is enough motivation for them to keep demonstrating that they are the most hospitable organization in the world. Summary Hilton Worldwide remains one of the largest hospitality companies in the world. Their corporate structure has proven successful worldwide, with the United States market making up a majority of their revenue streams. As Hilton continues to expand beyond American borders, differentiating a strategy for each country will be of utmost importance. Hilton has been able to create profitable relationships with guests and maintains a high degree of customer satisfaction.

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Management structure is centrally controlled which has allowed them to keep a consistent image and uphold their value in brand equity. Hilton continues to focus on the customer as evident by growth strategies and will look to further develop the brand abroad, build strategic partnerships online, and leverage their high-quality competitive advantage. Overall, Hilton is positioned well to succeed in the future. Increasing demand and international travel have opened up the doors to attract a wide range of potential customers for Hilton to accommodate. Their business structure gives them an advantage as they have a large number of properties across the globe. It will be important to create meaningful experiences for each guest via the multitude of touchpoints prominent in today’s business environment. With their mission and vision clearly defined, along with the incredible team and resources available, Hilton Worldwide will continue to be a ...